Pay down debt or save to buy properties?

5 Replies

Hi BP,

I am trying to figure out the best course of action to take and im sure this question has been posed many times on here but some guidance would be great..question is do i try to eliminate as much debt as possible first or do i save as much money as i can to invest / purchase properties? 

Thanks!

@TIM HUGHES in nearly every case it is best to pay down debt first.  It really depends on the interest rate for each form of debt you have.  If you have any debt with the interest rate above, say, 8%, I would pay it down first.  Definitely any credit card debt, etc.  

Bad debt for a investor is a no go in my opinion. You need to clear all debt if you are going to jump into the fray of high risk investing. Remember as a investor you must accept the reality that you are putting it all on the line and as such risk losing it all. 95% of new investors fail to start or start and lose/get out early. Investing is not a smooth road and when the bumps hit the last thing you want is bad debt hanging over your head that can, and often will, bankrupt investors.

The most important starting point of any venture is the prep work. You want to build your investments on a stable foundation, you can not do that with bad debt pulling you down.

Additionally to be a successful investor you must be financially highly structured. Bad debt shows a sign of financial weakness in a individual. If you can not stay out of bad debt it is unlikely you have what it take to be a successful investor.  Prove to yourself you can be a successful investor by first getting your own financial house in order. Fail at that challenge and you will likely fail at investing.